The best cities to invest in apartment buildings for 2018 and which markets will provide best returns is the subject of this blog by veteran real estate investor and syndicator Vinney Chopra. He takes a look at the best cities to invest in apartments as many begin to see a softening of rental rates and rising vacancies.
Villas at Autumn Hills, one of Vinney Chopra's apartments in Atlanta metro area.
We enter 2018 with a changing environment in multifamily investing, but some of the underlying keys for investors’ success are still there if you look closely.
“The biggest challenge is going to be finding attractive places to put new money to work,” Brian Kingston, chief executive of Brookfield Property Group, one of the world’s largest real-estate investors, told the Wall Street Journal. “Investors need to be cautious about the prices they’re paying.”
Add to that the likelihood that interest rates are going to rise this year, and 2018 is shaping up to be particularly precarious.
But that doesn’t mean that Brookfield or any of the world’s other leading real-estate investors are going to be sitting on the sidelines this year. Rather, they are pursuing an unusually eclectic assortment of strategies spanning a wide range of geographies and asset classes.
Start with emerging markets where you see job growth and a favorable local government environment that encourages business development. As big cities see more new high-priced apartments coming on board in 2018, those rents will likely stop rising.
“Rents themselves are still lower in the suburbs, but if demand keeps growing for suburban rentals and supply continues to lag, that will also start to change,” Zillow Chief Economist Dr. Svenja Gudell said in a release.
“As more formerly urban renters move to the suburbs in coming years, we'll likely start seeing more apartment buildings and walkable amenities popping up in those communities," Gudell said.
As many of you know my companies have been investing in emerging markets in Texas and Georgia for the last 10 years. Emerging markets consists of:
- Job growth
- Trending rental increases
- Absorption of supply
- Fewer permits issued for new construction
- New business moving in the path of progress for that local segment of the metro area
We research to find these great main markets to invest in multifamily across the nation.
One of Villas at Riverside apartments, part of Vinney Chopra's investments in metro Atlanta market.
A number of these apartment main markets and submarkets are emerging
We feel that one should do even deeper research before investing.
One hint, I can give you is to look for the operating memorandums of the properties already on sale.
In the front or back of this beautiful information brochure, usually are five to 10 pages filled with great economic data and news about the area.
Brokers include that so Investors all across the world will know why investors should purchase that multifamily asset. You can take the sources of the economic news and growth of jobs articles and even do more research from those sites or publications. This just saves a lot of time.
Rents Stay Flat In Large Cities As Mid-Sized Cities See Growth
Increases in national rents have flattened for the last four months and observers are witnessing the slowest annual growth rate in six years, according to a new report from Rent Café.
The rental market is cooling down, with a 2.2 percent year-over-year increase, with the national rent reported at $1,354 in fall of 2017, according to Yardi Marix.
"The housing market follows a cyclical path. The fact that the prime summer seasonality did not cause significant rental growth is the latest signal that the market may be cooling,” Doug Ressler, senior analyst at Yardi Matrix, a sister division of RENTCafé, said in a release.
“However, these changes will be felt gradually, first in the largest and most expensive cities, followed by mid-sized markets, and eventually trickling down to smaller towns." Ressler said.
The Savan Villas, one of Vinney Chopra's Texas apartment investments.
Bullish on Texas and Georgia to invest in apartment buildings for 2018
I am quite bullish on Texas. Houston, San Antonio and even some parts of Dallas, even though it’s very heated market.
The other state I am bullish on is Georgia, especially Atlanta and vicinity.
The third market for great growth in my research is North Carolina and South Carolina.
In my thinking there are other markets worth looking at the growth potential that could be equally good to invest in: Cincinnati and Columbus, Ohio, Nashville, Tennessee, Birmingham, Alabama and St. Louis, Missouri.
Some of you may say, “Vinney, what about Salt Lake City, and some cities in Arizona?”
Please do your research and then decide.
I can definitely say study the numbers from your stringent underwriting and don’t fudge or manipulate to make the opportunity work.
Do extensive studying about the local market before you invest in apartment buildings in 2018.
But one thing is for sure, multifamily investing is the real game in town.
Jump into it as quickly as you can. Better yet, there is so much money flowing all around you, that you may want to harness that through a syndication process like I have been successfully doing for the last 11 years with my teams. You can enjoy the bigger fruits of cash flow and equity gains for your valued investors and yourself. Happy Investing.
About the author:
Vinney Chopra is the Founder and CEO of Moneil Investment Group and President of Ideal Investments Group. His latest accomplishments include acquiring 12 multifamily assets in the last 28 months, worth $132 million. His last two syndications were sold out in just a few hours, and one in 36 hours raising $4.7 million and another one $6 million in eight hours. Between the two syndication companies he founded, Vinney’s team is controlling over $200 million worth of assets. He is a mechanical engineer. After entering USA with $7, he graduated from The George Washington University with Master’s in Business Administration in Marketing, he shifted his focus to marketing and motivation. He was a professional fundraising consultant and motivational speaker for more than 35 years with a wonderful private company. Vinney and his wife started their real estate investments in 1983. Many times, people call him “Mr. Enthusiasm” or “Mr. Smiles.” He likes to bring great value to everyone he comes in touch with. He likes to add value to everyone around him. You can also reach him at firstname.lastname@example.org